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SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accrued liabilities related to restructuring actions consist of (in thousands):
Note 6 — Acquisitions
TinyPictures, Inc.
On September 10, 2009, the Company acquired all of the outstanding common shares and securities convertible into common shares of
TinyPictures, Inc. (“TinyPictures”)
for a total aggregate purchase price of $1.3 million. The Company also granted $1.3 million in contingent
consideration in the form of performance-based restricted stock units (“PBRSUs”)
to continuing employees. Vesting of the PBRSUs is
contingent on achieving certain performance milestones and continued employment. TinyPictures developed applications that enabled users to
share images and videos to others across mobile networks and social networking platforms. The acquisition was accounted for as a non-
taxable
purchase transaction and, accordingly, the purchase price has been allocated to the tangible assets, liabilities assumed, and identifiable intangible
assets acquired based on their estimated fair values on the acquisition date. The excess of the purchase price over the aggregate fair values was
recorded as goodwill. Stock based compensation associated with the PBRSUs will be recognized when the achievement of the performance
milestones are deemed probable.
The total aggregate purchase price of $1.3 million was comprised of $1.0 million in cash consideration and $0.3 million in assumed working
capital deficit. Of the purchase price, $0.1 million was allocated to in-
process research and development having an indefinite life and $51,000
was allocated to core technology and user base which will be amortized over their estimated useful lives of one to three years. The Company
also recorded a deferred tax asset of $0.6 million which relates to the net operating loss carry-
forwards from TinyPictures. The remaining excess
purchase price of approximately $0.5 million was allocated to goodwill which represents the knowledge and experience of the assembled
workforce and future technology. The results of operations for TinyPictures have been included in the consolidated statement of operations for
the period subsequent to the acquisition date. Acquisition-related costs were included in general and administrative expenses in the Company’
s
consolidated statement of operations for year ended December 31, 2009.
The following table presents the pro forma statements of operations obtained by combining the historical consolidated statements of
operations of the Company and TinyPictures for the years ended December 31, 2009 and 2008, giving effect to the merger as if it occurred on
January 1, 2009 and 2008, respectively (in thousands, except per share data):
Facility
Closure
Costs
Workforce
Reduction
Costs
Total
Balance, December 31, 2008
$
80
$
633
$
713
Restructuring charges
271
194
465
Payments
(351)
(827)
(1,178)
Balance, December 31, 2009
$
—
$
—
$
—
Year Ended
December
31,
2009
2008
Pro forma revenue
$
246,453
$
213,504
Pro forma operating income/(loss)
7,083
(1,487
)
Pro forma net income/(loss)
4,228
(561
)
Pro forma basic and diluted net income/(loss) per share
$
0.16
$
(0.02
)
71